With Whistleblower Bill, Pennsylvania Lawmakers Look to Take on Fraud

Pennsylvania lawmakers have introduced legislation that, if passed, would make the state the latest in the nation to enact a far-reaching — and potentially fraud-busting — whistleblower statute. House Bill 1493 — the Pennsylvania False Claims Act — would allow whistleblowers to file a civil lawsuit against anyone alleged to have committed health care or other fraud against the state.

The bill emulates some of the key provisions of the federal government’s landmark whistleblower law, the False Claims Act. Dating back to the Civil War, but substantially modified in the mid-1980s, that statute is widely considered the gold standard of whistleblower legislation, and has led to the recovery of more than $30 billion for the government since 1986. It has done so by both incentivizing and protecting those with knowledge of wrongdoing.

Like the federal statute, the Pennsylvania bill would enable whistleblowers to share in any ultimate recovery and would provide employment protections for those who pursue a false claims lawsuit. The bill also specifies that if the alleged fraud is proven in court, violators would be liable for triple the damages sustained by the state. While the whistleblower can initiate the lawsuit, the state attorney general’s office would have primary responsibility for investigating and prosecuting the action.

“Already, we have seen more than half of all states enact a false claims act,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized whistleblower law firm, and a veteran whistleblower lawyer. “They have done so because they see the very clear, very substantial, success the federal government has had in reining in fraud with the assistance of whistleblowers. These are individuals who know something is wrong and can speak out and help us make it right. With this bill, Pennsylvania is taking exactly the right steps to encourage and assist them.”

If approved by the legislature, the bill would return precious revenue to the state while punishing those who cheat Pennsylvania taxpayers through fraud, according to state Rep. Brandon Neuman, a co-sponsor of the measure.

States aren’t the only ones taking on fraud through whistleblowers. A number of federal agencies — including the Internal Revenue Service and the Securities and Exchange Commission — have enacted whistleblower programs. And legislation such as Sarbanes-Oxley also contains provisions designed to encourage those with knowledge of wrongdoing to speak out, and to assist them when they do.

“Fraud has been a problem long before the original False Claims Act was enacted in the 1860s,” says Keller, whose firm has offices in Los Angeles and San Francisco. “But there has never been a more important time to take it on. Budgets are tight, resources need to be carefully directed. Those who commit fraud against the government get rich at the expense of all of us. Whistleblower statutes provide states with an essential tool to prevent that, and this bill will let Pennsylvania wield it, too. We look forward to welcoming them to the club.”